Transcript Figure 5.1: The Five Generic Competitive Strategies

Figure 5.1: The Five Generic
Competitive Strategies
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Low-Cost Provider Strategy
 Provide goods or services with features
acceptable to customers at lowest price
 Appeal to broad spectrum of buyers
 Produce good basic product with few frills
 Must have lowest overall costs
 Must achieve competitive advantage based
on costs
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Low-Cost Provider Strategy
 2 major avenues for achieving a cost
advantage
 Cost-efficient management of value-chain
 Revamping value-chain
 Keys to success
 Works best when?
 Pitfalls/Risks
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Differentiation
 Provide products that customers perceive as
being unique in ways that are important to
them
 Appeal to a broad spectrum of buyers
 Uniqueness must be valuable to buyers and
hard to imitate
 Price premium charged must be greater than
cost to differentiate
 Many approaches to differentiation
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Differentiation
 Types of differentiation
 Differentiation and the value-chain
 Best approaches to differentiation
 Works best when
 Pitfalls/Risks
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Best-Cost Provider Strategy
 Mix of low cost and differentiation
 Give buyers more value for the money
 Meet expectations of product attributes and
beat expectations of price
 Must offer significantly more value for the
money
 Works best when?
 Pitfalls/Risks
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Focus
 Concentrate attention on a narrow piece of
the total market
 Try to do a better job of serving buyers in the
target market niche than rivals
 2 approaches
 Focus low-cost
 Focus differentiation
 Attractiveness
 Risks
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A Company’s Menu of Strategy Options
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Supplementing Competitive Strategy
 Strategic Alliances and Partnerships
 Mergers and Acquisitions
 Vertical Integration
 Outsourcing
 First-Mover Advantages and Disadvantages
 Offensive and Defensive Strategies
 Web Site Strategies
 Functional-Area Strategies
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